Introducing the Community Shares Unit

What is the Community Shares Unit? DCLG-funded programme launched in 2012 and running to March 2015 Partnership between Co-operatives UK and Locality (building on an 2009 action-learning research programme) Objective to grow the market for community shares, supporting: Communities looking to develop share offers Supporters exploring the community shares market Intermediaries, practitioners and advisers involved in comshares

What are community shares? “The sale of shares in enterprises serving a community purpose, with the aim of raising at least £10,000 in capital from no fewer than 20 members” Unique to co- operative and community benefit societies Non- transferable, nominal One Member One Vote Exempt from regulation under the FSMA 2000 Interest payment only sufficient to attract investment Powered by Withdrawable Share Capital

The benefits of community shares Capital “Community shares offers can provide long-term risk capital linked to the performance of the society” Leverage “Community share offers can lever further funding based on the ‘first move’ of the community” Governance “Community shares can give members meaningful involvement in the running of the society” Operation Community share offers can ‘bake in’ the customer base and promote member involvement in the operation of the enterprise”

Community shares in pictures

Case Study: Bell Inn, Bath An iconic pub in central Bath suddenly came up for sale as the owners were retiring A strong community of regulars, musicians and local residents were determined to preserve the ethos of the pub – they had 12 weeks to organise a community buyout In this short period, the community raised £750,000 and secured mainstream debt finance to meet the overall purchase price of nearly £1m The Bell Inn is a viable business which will enable interest payments to shareholders, alongside facility for withdrawals

Community shares over last five years There have been 153 community share offers compared to 108 flotations (or Initial Public Offerings) of UK listed companies in the last five years E&Y IPO Global Centre of Excellence

Community shares market indicators: Nearly 400 new societies registered Over 180 share offers undertaken Est. £30m raised from over 20,000 members Average offer raised £200,000 Average membership 200 members Average investment per member £1,000

Key pillars of a successful share offer Business model ViableProfitableSustainable Community engagement Scale and scope Attracting support Building membership Governance Legal formRulesConduct Offer document AccurateInformative Share offer ‘campaign’

With growth comes ‘responsibility’ - the future work of the CSU Best practice share offers Market intelligence Community Shares Handbook Practitioner training and accreditatio n Advice and Support CSU compliance mark / microgenius CSU is working to develop the tools and structures that will support greater responsibility over quality for community share offers

Market Intelligence Regularly updated directory of registrations, share offers and annual returns Searchable and exportable data Forms the basis for more in-depth research into the development of community shares market

Community Shares Handbook Consolidation of all advice materials to form Community Shares Handbook Oversight from a technical committee of government representatives and FCA Collaboratively developed with practitioners through an online platform Regularly updated and monitored to ensure relevancy and accuracy

Practitioner training and accreditation InformedCurrent High-qualityConsistent Recognition that advice is: Accredited training based on practical experience Ability to issue Community Shares Compliance Continued support as Community Shares advisor

“to establish and operate a kite mark or code which would support the adoption and diffusion of good practice of community share offers as part of a co-regulatory framework ” Underpinned by the Community Shares Handbook Awarded by accredited advisers with CSU monitoring and peer review Associated complaints procedure in which CSU arbitrates Offered in conjunction with hosting on Microgenius Community Shares compliance

Introducing Microgenius Technological tool for both enterprises and supporters Secure payment facility Shareholder register Social media and online presence Visible portal for all compliant share offers CSU is running Microgenius as a pilot to explore the value of an online platform to host community share offers – since June 2013, six share offers have raised over £800,000

Online Resources Tailored resources: enterprises, supporters, advisers Directory of share offers Secure practitioners area Forums and FAQs New case studies Links to helpful organisations

CSU and market development By sector: exploring the use of community shares in new and emerging markets such as heritage, housing, media and transport By geography: developing a ‘hub and spoke’ model for a UK-wide CSU which works alongside the devolved nations By audience: engaging new and promising audiences such as local authorities, CDFIs and charities

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